Krugman e il contesto dei numeri

If you look at the way Japan’s Ministry of Finance reports the country’s fiscal condition (pdf) you see a chart (p. 9) which says that National Debt Service is 22.4 percent of the budget. And you might think that this means interest payments.

But it doesn’t. Japan defines debt service as interest payments PLUS redemption of bonds, in effect principal repayments.

If you look at the previous chart, you see that interest payments were much smaller — a bit over 10 percent of the budget. Now, the budget includes debt service; so you might want to express interest as a share of non-debt spending, which makes it around 14 percent.

Did I know this earlier today? No — but I did know that Japan’s interest payments were in the vicinity of 2 percent of GDP, which meant that Senor’s claim couldn’t be right.

When quoting numbers, you really want to have some context; it’s a good way to avoid bloopers.